Question
Mega Chips is a retailer of computer chips in the Metro Atlanta region with several retail outlets. Currently, each outlet manages its ordering independently. The
Mega Chips is a retailer of computer chips in the Metro Atlanta region with several retail outlets. Currently, each outlet manages its ordering independently. The demand for its most popular chip, The Dragon, averages about 90 units per week with a standard deviation of 10 units. Each chip costs $225 per unit to source from a manufacturer and Mega Chips has an annual cost of capital of 20%. The fixed administrative cost of placing an order is $245. Each order's fixed delivery cost is $755 independent of the size of the order. The supply lead time is about 2 weeks. Assume 50 weeks in a year.
a. Given that each outlet orders independently and gets its own delivery, the optimal order size at each outlet is.........
B. Currently each store places their order whenever they have 200 units on hand. What is the customer service level (CSL) provided by each store and what is the safety stock? Show your calculations
C. What is the annual average inventory and ordering cost of Mega Chips? Show your calculations.
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